Uber Generated More Revenue But Still Suffered Loss in 2015
Leaked data shows Uber generated more revenue in 2015 than it had made in the previous year. However, its operational cost grew rapidly following its pursuit for growth.
Business Insider reportet that Uber's losses are mounting, but its revenues are growing too. In the third quarter of 2015, Uber generated $498 million, more than the $495.3 million it generated in the entire 2014. However, in the same quarter, it lost lost $697 million.
Meanwhile, according to Bloomberg, Uber discounted its fares, and it is becoming like a holiday tradition for the company to lower fares. Travis Kalanick and his management team decide to reduce its rates by 10% in 100 cities across North America starting January. This year's fare cut is its third in a row for three consecutive years, and some drivers have expressed dissatisfaction about their decreasing revenue.
Recent price cut made Uber per mile rates less than cost of gas and cars depreciation, based on IRS figures. An Uber driver in Indianapolis, Bill Scroggins articulated his discontent, "I'm not even sure I want to drive anymore. It feels like I'm doing it for free."
Uber regional manager, Andrew MacDonalds explained the price cut was meant to help driver, He said, "We care deeply about driver earnings. We believe in price cuts when demand slows."
"Uber has to sacrifice profits for growth," said Evan Rawley, a professor at Columbia Business School regarding the recent policy.
In pursuit of growth, Uber has finally made one breakthrough to follow its rival Lyft. Yesterday, Uber has been granted permission to join Lyft providing its ride-hailing service in LAX airport, the second-busiest airport in the U.S.. Lyft and its signature pink mustaches have been servicing passenger in LAX since last month, and according to Airport authorities, there have been 50,000 pickups and drop-offs in the first two weeks of its service.
Uber general manager of Southern California, Christopher Ballard told Los Angeles Times, "We're very excited to play a part in simplifying and modernizing the LAX experience."
While Los Angeles mayor Eric Garcetti said the Uber and Lyft operation in LAX will provide travelers more options for airport's ground transportation. Uber and Lyft give a very competitive price to regular taxi and more convenient way to travel. Trip from LAX to downtown LA normally cost more than $50, while a ride-hailing service is only $30, and from the city of Santa Monica to LAX, taxis fare is around $29 while Uber X service is only at around $19.
Uber generated more revenue, but the company still suffer losses. With its cut fares, the Sand Fransisco-based ride hailing service aim to increase the volume of its sales. Its new service expansion in LAX airport shows that Uber is pursuing growth more than profits.